Hawaii bankruptcies rose in May to the highest level for that month in six years as the state economy continued exhibiting signs of slowing growth.
The number of filings last month increased 14.3% to 144 from 126 in the year-earlier period, according to new data released by the U.S. Bankruptcy Court, District of Hawaii. They were the most filings for any May since 150 were filed in 2014. Statewide bankruptcies have now risen four of the five months this year.
At the current pace, statewide filings will rise for the second year in a row after seven straight years of declines. Through five months, bankruptcy cases are up 14.3% to 703 from 615 during the same time frame in 2018.
Honolulu bankruptcy attorney Don Spafford Jr. said he’s been filing more cases and noticed the upward trend gaining momentum at the beginning of the year.
“It’s a sign that the economy is slowing down, and some of it is people still struggling with their mortgage. That’s typically the Chapter 13 cases,” Spafford said. “I think because the economy is slowing down, people aren’t getting as much overtime or working as many hours in a second job.”
Chapter 13 filings allow individuals with regular sources of income to set up plans to make installment payments to creditors over three to five years. Those types of cases jumped 23.4% last month to 58 from 47 in the year-earlier period.
Spafford said the clients he’s been seeing typically are having cash-flow problems and can’t pay all their debts.
“A lot of it is credit cards,” he said. “Some people run into unusual situations, but they’re usually the exceptions. I believe the inverted yield curve (that is affecting the U.S. economy now) is one of the best predictors of a (looming) recession where the 10-year note pays less interest than the three-month Treasury bill.”
Filings for Chapter 7 liquidation, which is the most common type of bankruptcy, rose 7.6% in May to 85 from 79.
There was one Chapter 11 filing during the month by Lahaina-based CA Financial Solutions and none in the year-ago period. Chapter 11 filings typically involve business reorganization.
Bankruptcy filings rose in two of the four major counties from the year-earlier period. Honolulu County filings spiked to 105 from 80, and Maui County filings increased to 25 from 17. Hawaii County filings fell to nine from 14, and Kauai County filings dropped to five from 15.
SEEKING RELIEF
Bankruptcy filings in May rose from a year ago.
2019 2018 PCT. CHANGE
Chapter 7 85 79 7.6%
Liquidation
Chapter 11 1 0 —
Business reorganization
Chapter 13 58 47 23.4%
Individuals with regular sources of income set up plans to pay creditors over time.
Total 144 126 14.3%
Source: U.S. Bankruptcy Court, District of Hawaii
